TRENTON — New Jersey on Monday was hit with its 10th credit downgrade under Gov. Chris Christie, reflecting growing government worker pension obligations that are among the highest in the U.S.

Standard and Poor's Global Ratings lowered the state's rating from "A" to "A-". The move comes after the rating agency Standard and Poor's Ratings Services revised its outlook for New Jersey from stable to negative over concerns with the declining pension funding levels and rising retirement liabilities.

TRENTON — New Jersey on Monday was hit with its 10th credit downgrade under Gov. Chris Christie, reflecting growing government worker pension obligations that are among the highest in the U.S.

Standard and Poor's Global Ratings lowered the state's rating from "A" to "A-". The move comes after the rating agency Standard and Poor's Ratings Services revised its outlook for New Jersey from stable to negative over concerns with the declining pension funding levels and rising retirement liabilities.

"We base the downgrade on our expectation that state budget pressures will intensify in future years," analyst David Hitchcock said in a statement. "Recent events have added incremental out-year budget pressure, in our opinion, to what is already a sizable structural budget imbalance driven primarily by pension underfunding."

Decades of underfunding have weakened the pension system, as have more recent poor investment returns. The fund lost 0.87 percent in the fiscal year that ended in June, based on unaudited figures, and investment returns in the year before were 4.16 percent.

As of July 1, 2015, New Jersey's state and local pension funds have just 37.5 percent of the funding it needs to pay for future benefits. That is based on new reporting standards that require the state to project lower investment returns and had bleak consequences for the state's estimates.

State Treasury spokesman Willem Rijksen said the latest downgrade "effectively amounts to another call for further pension and health benefit reforms, which the governor repeatedly has said are necessary."

"Simple fact: our rating system would be injured further if Gov. Christie had not enacted reforms early in his administration," Rijksen added.

He also noted the state made the largest pension payment this year, at $1.9 billion. "That payment will boost total contributions by the Christie administration to $6.3 billion," he said.

New Jersey's state and local pension funds had slightly more than $217 billion in liabilities and $81.4 billion in assets, leaving it with $135.7 billion in unfunded liabilities, up from $113.1 billion as of July 1, 2014.

The gap between what the state actually pays in each year and what is recommended by actuaries to keep up with the piling obligations contributes to a so-called structural budget imbalance that S&P said is now equal to 13 percent of the state's budget.

The agency noted that the state is on a path of increasing annual contributions, but that continued improvement isn't guaranteed. Public worker unions are seeking a constitutional amendment that would require the state keep to a payment schedule.

While the pension debt is primarily to blame, S&P cited other ongoing budget concerns, including the volatility in certain state tax collections, slow revenue growth and low reserves.

"Even without a downturn in revenues, natural revenue growth has not kept pace with rising costs, and priorities other than pensions such as education, Medicaid, debt service and other postemployment benefits also contribute to the fiscal 2017 structural imbalance," the agency said.

The Transportation Trust Fund tax package signed into law last month poses a risk to the state budget in coming years, it also warned, as lawmakers agreed to give up about $1.1 billion in estate, sales and income taxes annually by 2021 in return for an increase in the gasoline tax to restore the trust fund.

Original article